Bosses object to levy hike

PETALING JAYA: Companies are already reeling from the economic downturn and cannot afford to pay steep increases in levies for foreign workers.

The Malaysian Employers Federation (MEF) is preparing a memorandum on behalf of members against what it has described as a “shocking decision” by the Government to raise the quantum of foreign worker levies.

“We will also request a meeting with the Deputy Prime Minister to discuss the concerns of employers,” MEF executive director Datuk Shamsuddin Bardan told The Star.

Deputy Prime Minister and Home Minister Datuk Seri Dr Ahmad Zahid Hamidi announced the new charges on Sunday.

The foreign worker levy for the manufacturing, construction and service sector has been increased to RM2,500 while for those in the plantation and agriculture sectors, it has been raised to RM1,500.

Dr Ahmad Zahid said the revised levy would boost the Government’s revenue by an additional RM2.5bil.

Malayan Agricultural Producers Association (Mapa) executive director Mohamad Audong said it would also join MEF in collectively appealing against the decision.

The new levy imposed for workers in the plantation sector is RM910 more than the previous RM590.

“The new rate will cost Mapa members an additional RM450mil annually. With the price of commodities at low levels, the new levy rates will make it even more difficult for Mapa members, which include many government-linked companies, to survive.

“The sad thing is there were no discussions with us before the new rates were imposed,” he said.

Masterbuilders Association Malaysia (MBAM) president Matthew Tee said builders would also seek a review of the decision.

He said many other business associations, affected by the decision, were scheduled to meet today at the office of the Associated Chinese Chambers of Commerce and Industry of Malaysia after which a press conference would be held.

Federation of Malaysian Manu­facturers (FMM) president Datuk Seri Saw Choo Boon said the meeting would decide the next course of action.

In an earlier statement, FMM strongly objected to what it described as the “sudden and steep increase” of foreign workers’ levy rate in the manufacturing sector – from RM1,250 to RM2,500 per worker.

“The sudden decision to double the levy rate for the manufacturing sector with immediate effect is unacceptable,” he said.

“The Government has not given due consideration to the significant impact on business sustainability and socio-economic consequences.”

FMM also pointed out that it had asked for rates to be maintained until economic conditions improved.

It said manufacturers were already facing the rising cost of doing business, including the new minimum wage level, higher energy costs, higher costs of raw materials and lower sales as a result of the weakening ringgit.

“Business sustainability is at stake. Jobs are also at stake, even for local workers when businesses find great difficulty in sustaining their operations,” Saw said.

FMM urged the Government to look at business sustainability in totality.

“All these issues put together can become an insurmountable economic fire which can overwhelm and consume businesses, employees and suppliers throughout out the supply chain,” said Saw.

SME Association of Malaysia’s president Michael Kang said instead of increasing levies, unregistered foreign workers should be legalised.

“If the levies bring in additional income to the country, then legalise all the unregistered foreign workers.

“Currently, there are only two million registered foreign workers but if you legalise all the unregistered ones, the income will be more.

“This is better than raising the levies,” said Kang, adding that the legalisation of unregistered foreign workers should be done by the Home Ministry and not be outsourced.

He said the association would also appeal the Government’s decision.

Kang said foreign workers would not be able to pay the increased levy because they were also feeling the pinch of the economic downturn.

“They will ask their employers to absorb it,” he said.

Kang said as almost 80% of small and medium-scale enterprises target the domestic market, the increased cost would be passed on to customers.